What Consumerism

means for marketers

Philip Kotler (1972)
Harvard Business Review
Consumerism “is a social movement seeking to
augment the rights and power of buyers in relation to
sellers”
Causes for rise in Consumerism
1. Structural Conduciveness
• Advancing incomes and education
• Advancing complexity of technology and marketing
• Advancing exploitation of the environment
2. Structural strain
• Economic discontent (inflation)
• Social discontent (war and race)
• Ecological discontent (pollution)
• Marketing system discontent (shoddy products,
gimmickry, dishonesty)
• Political discontent (unresponsive politicians and
institutions)
3. Growth of a generalized belief
• Social critic writings (Galbraith, Packard, Carson)
• Consumer oriented legislators (Kefauver, Douglas)
• Presidential messages
• Consumer organizations
4. Precipitating factors
• Professional agitation (Nader)
• Spontaneous agitation (Housewife picketing)
5. Mobilization for action
• Mass media coverage
• Vote-seeking politicians
• New consumer interest groups and organizations
6. Social control
• Business resistance or indifference
• Legislative resistance or indifference
Consumerism:
Will be enduring
Beneficial
Pro-marketing
Can be profitable
New opportunities
1.product reformulations
2.consumerist orientation
New product Opportunities
Immediate satisfaction

LOW HIGH

HIGH Salutary Products Desirable Products

Long-run
consumer
welfare
LOW Deficient Products Pleasing Products
Conclusion
Consumerism mobilizes the energies of the
consumers, business and government leaders to seek
solutions to several complex problems in a
technologically advanced society
Products and marketing practices must be found
which combine short-run and long-run values for the
consumer
Societal marketing is a basis for earning increased
consumer goodwill and profits
Buying is marketing too!
Kotler & Levy (1973)
Journal of Marketing
Marketer studies the consumer:
The seller is able to identify and create the goods and
services consumers really want
The cost of goods and services is decreased through
precise targeting of corporate communication, pricing
and distribution strategies
Other disciplines taking the Buyer’s point of
view
Purchasing
Home economics
Political economy
The problem of Reluctant Seller
Limited Supply situation (seller rations his goods and
the buyer must find a strategy to place himself high on
the seller’s list)
Preferred customer situation (seller wants to sell to
specific persons)
1. qualification strategies
2. undermining startegy
Strategies for Intent buyers
Strategy of Coercion (use of force or authority)
Strategy of Inducement (bribery)
Strategy of Persuasion
Strategy of Education (change the seller’s values so
that he accepts the buyer)
The buyer as marketer
Price (as inducement strategy, ex. auctions)
Product (create a favorable impression)
Promotion
Distribution
Conclusion
Sellers also perform buying functions and should find
the buyer perspective useful
Sellers should attempt to minimise company policies
that create buyer frustration
Sellers should learn how to handle more effectively
the growing sophistication and aggressiveness of
buyers in pressing their claims
Influencing Buyer
Behavior
R.R.Dholakia, (1979)
European Journal of Marketing
 THE EXCHANGE PROCESS

S Product/ Service
E B
L U
Information
L Y
E E
Money
R R
S S
The Persuasion Paradigm
A set of arguments advanced by communicator is
cognitively processed, evaluated and accepted,
rejected or distorted, stored in the memory, forgotten
or acted upon.
The paradigm suggests a procedure for creating a
desired behavior by postulating and acting upon its
causal antecedent- attitude.
Critical Assumption

Creation of a favorable attitude leads to behavior

consistent with that attitude.
Attitude-Behavior gap
Some mass communicators create acceptance of the
position or idea advocated in the message while most
others advocate a certain specific behavior or form of
action based on the acceptance of the message. Ex
political candidates, charitable organizations
Researchers conclude that although significant, the
attitude-behavior relationship is quite low and the
direction of causation unspecified.
Some researchers even conclude that rather than
attitude causing behavior, behavior causes attitude.
It is easier to change attitudes to be consistent with
behavior than vice versa.
Behavior in intra-personal persuasion
When consumers have performed relevant behavior,
then this is available as intra-personal information to
assess their own attitudinal judgment.
The use of such intra-personal information is
dependent on its salience, which is governed by
importance, frequency and recency of behavior.
Attribution theory is used to explain attitude from
one’s behavior.
Individuals attempt to understand their own and
other’s behavior and its causes by examining the
conditions under which behavior takes place.
This process leads to an inference about the relative
importance of various causes
It assesses the role of internal over external
determinants
 The Attribution Process

External
causes

Unfavorabl
e Attitude
Causal
Behavior Analysis
Favorable
Attitude

Internal
causes
Perception of Subjective Volition determines whether
behavior is attributed to the self and not to the
environment.
Subjective Volition is highest when perceived external
pressures for compliance are low, when equally
attractive opportunities for expressing alternative
behavior exist and an individual expresses a specific
choice.
Process Differences
Extra-person Persuasion:
Attitude Behavior

Behavior-based Persuasion
Behavior Attitude
When behavior is present or available as intra-
personal information, its use mediates or moderates
the influence of external information.
In absence of behavior characteristics of
communication (like source credibility, appeals)
determine its effectiveness.
Marketing Implication
Use of Source Credibility
Use of Incentives
Influencing Perceived Choice
Conclusion
Individuals use external as well as intra-personal
sources of information in evaluating their own and
other’s behavior.
Such evaluation includes the subjective testing of
validity of external information
Extra and intra- person persuasion involves different
processes which lead to different implications about
strategies.
Post-behavior persuasion is seen to be affected by the
perception of subjective volition.
Conditions which facilitate the perception of
subjective volition also hinder pre-behavior
persuasion. (ex. High credibility source, limited
alternatives, incentives)
Research indicates that pre-behavior attitude is not a
sufficient strong condition for behavior.
Incentives are necessary to manipulate behavior
directly.
The Behavioral Consequences
of Service Quaality
Zeithmal, Berry & Parsuraman(1996)
Journal of Marketing
Delivering quality service is considered to be an
essential strategy for success and survival in today’s
competitive environment (Dawkins & Reichheld, 1990;
Parasuraman, Zeithmal & Berry, 1985; Reichheld &
Sasser, 1990; Zeithmal, Parasuraman & Berry, 1990)
Today it is important to understand the impact of
service quality on profit and other financial outcomes
of the organization (Greising 1994; Rust, Zahorik &
Keiningham 1995)
The link between service quality and profits is neither
straightforward nor simple (Greising 1994; Zahorik &
Rust 1992).
In order to find out the complex relations between
service quality and profits, the researcher must
understand many other relationships which is an
integral part of the composite.
Offensive effects
Defensive effects
Five tasks that model the impact of service
on Profits
1. Identifying the key service attributes to include in
the model
2. Selecting the most important attributes
3. Modeling the link between programs and attitudes
4. Modeling behavioral response to service programs
5. Modeling the impact of service programs on profits
Lowering customer defection rates can be profitable to
companies
It is a more profitable strategy than gaining market
share or reducing costs
Customer defections have a stronger impact on a
company’s profits than “scale, market share, unit costs,
and many other factors usually associated with
competitive advantage” (Reichheld & Sasser, 1990)
Financial impact of defection
Financial impact of retention
Favorable behavioral intentions
praise the firm
express preference for the company over others
increase volume of purchases
agreeably pay a price premium
Unfavorable behavioral intentions
spend less
complain (voice responses, private responses,
third-party responses)
defect
Differential impact of service-quality levels
desired service
adequate service
Impact of problem experience and resolution
Hypotheses
H1: The service quality-behavioral intentions relationship
(a) is positive (negative) for favorable (unfavorable)
behavioral intentions and (b)has a different slope below
and above the zone of tolerance relative to within it
H2: Favorable (unfavorable) behavioral intentions are (a)
highest (lowest) for customers experiencing no service
problem; (b) next highest (lowest) for customers
experiencing service problems that are resolved, and (c)
lowest (highest) for customers experiencing service
problems that are not resolved.
Results
Factor Analysis provided a five factor solution
Loyalty to the company
Propensity to switch
Willingness to pay more
External response
Internal response
Contd…
H1 predicted a positive (negative) quality intentions
relationship for favorable (unfavorable) behavioral
intentions, with different slopes below and above the
zone of tolerance relative to within it.
H2 predicts that customers experiencing no service
problems have the best behavioral-intentions scores
Critical service encounters:
The employee’s viewpoint
Bitner, Booms & Mohr (1994)
Journal of Marketing
Service quality researchers suggest that “the proof of
service (quality) is in its flawless performance” (Berry
& Parasuraman, 1991)
The service encounter involves two people, so it is
important to understand the encounter from multiple
perspectives. Such understanding helps firms to
design processes and educate both employees and
customers to achieve quality in service encounters.
Customer and contact employee viewpoints
Customer knowledge can be used to improve service:
Such knowledge is used by the contact employees
themselves to facilitate their interactions with
customers &
It is used by the firm for making decisions
Employees modify their behavior on the basis of
feedback they receive while serving customers
Contact personnel have frequent contact with
customers and can serve a boundary-spanning role in
the firm.
Role & Script theories
Role : behavior associated with a socially defined
position
Role Expectations: standards for role behavior
Script: structures that describe appropriate sequences
of role behaviors
Attribution Theory
“differences in viewpoint”

Self- enhancing bias

Self-serving attribution bias
Self-protecting bias
Managerial Implications
Using the classification scheme
The Customer is not always right
Employees as Sources of Customer data
Employee desire for knowledge and control
Reliability is critical
Conclusion
Many frontline employees have a true customer
orientation and identify with and understand
customer needs in service encounter situations.
They have respect for customers and a desire to deliver
excellent service.
Customers can be the source of their own
dissatisfaction through inappropriate behavior or
being unreasonably demanding.
A model of industrial
buyer behavior
Jagdish Sheth (1973)
Journal of Marketing
Objectives
To broaden the vision of research on organizational
buying behavior so that it includes the most salient
elements and their interactions
Act as a catalyst for building marketing information
systems from the viewpoint of the industrial buyer
To generate new hypotheses for future research on
fundamental processes underlying organizational
buyer behavior
 An Integrative Model of Industrial Buyer Behavior
(4)
Specialized Role
Life Style Situational
Education Orientation
(1b) Factors
Information
Sources
(1c)
Salesman Active (1a) (1e)
Search Background Satisfaction
Exhibition & Of the with
Trade Shows individual Purchase
Direct Mail

Press Release (1) Autonomous

Expectations of Decisions
Journal 1.Purchasing agent Supplier or Brand
Advertising 2.Engineers 3.Users Choice
Professional 4.Others (2)
& Technical Industrial
Conference Buying Joint
Process (3)
Trade News Decisions
Conflict Resolution
1.Problem Solving
WOM
s2.Pursuasion
(2a) (2b)
Others 3.Bargaining
Product- Specific Company-Specific
4.Politiking
Factors Factors

Perpetual
Distortion

Time Perceived Type of Organization Organization Degree of

Pressure Risk Purchase Orientation Size Centralization
Implications
In order to explain and predict supplier or brand
choice in industrial buyer behavior, it is necessary to
conduct research on the psychology of other
individuals in the organization in addition to the
purchasing agents.
It is possible to operationalise and quantify most of
the variables included as part of the model
More research is needed on the demographic and life-
style information on the individuals involved in
industrial buying decisions.
A systematic examination of the power positions of
various individuals involved in industrial buying
decisions is necessary for the model.
It is essential in building any market research
information system for industrial goods and services
that the process of conflict resolution among parties
and its impact on supplier or brand choice behavior is
carefully included and simulated.
Not all industrial decisions are an outcome of
systematic decision-making process.
A Review of Buyer
Behavior
Jagdish Sheth(1967)
 Typology of Conclusion
Introduction Concluding
Theoretical
Need for remarks on
research in Concepts development
buying Classification of buyer
behavior of existing behavior as a
research theory
Introduction
Need for research in buying behavior
Usage of technology to maintain market share or gain entry
into a market
Division and specialization of labor in the marketing activities
Advancement in technology, enabling marketing managers to
collect, compile and analyze marketing information
Information is costlier implying proper utilization of such
information
Adoption of modern tools of decision making such as
operations research, statistical methods, computer
simulations etc.
Typology of Theoretical Concepts

CONCEPTS

ADSPECTIVE ULTRASPECTIVE
Hierarchical Scheme of Existing Research on Buyer
Behavior
(Adspective)

Omnispective
Relational Classificatory
Operations Research Market Segmentation
Experimentation Class Theories
Simulation Reference Group Theories
Hierarchical Scheme of Existing Research on Buyer
Behavior
(Ultraspective)

Hypothetical
Motivation
research &
Psychoanalytic
Specified Unspecified
Approaches
Cognitive Dissonance Theory
Perception Risk Taking
Learning Theory Lewin’s Field Theory
Relational Omnistic Concepts
Operations Research
First- Order Markov Chains
Factor Analytic Model of Brand Loyalty
Stochastic Methods

Experimentation

Computer Simulation
Classificatory Omnistic Concepts
Market Segmentation

Class Theories
Class
Culture
Sub- culture

Reference Group Theories

Propriospective Concepts
Consumer Anticipations
Consumer Expectations
Attitudinal Preference as Predictor of Behavior
Hypothetical Concepts
Specified Hypothetical Concepts
Perception
Learning

Unspecified Hypothetical Concepts

Risk Taking
Cognitive Disonance
Lewin’s Field Theory
Fictional Concepts
Motivation Research
Psychoanalytic Approach
Personality Variables
Self Concept
Conclusion
Interdisciplinary contribution

Development of Buyer Behavior Theory

Final Remarks
Thank You.